Market Report: Laporte & Reckitt push FTSE over the 6,600 barrier

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RECKITT & COLMAN and Laporte yesterday supplied the market with the takeover speculation needed to break its all-time closing high.

The two bid favourites reappeared on dealers' radar screens just as the FTSE 100 climbed above the 6,600 level for the first time in its history.

The household products group Reckitt & Colman soared 27.5p to 717.5p as takeover winds whistled past. Rumour has it that Reckitt is lining up the disposal of its US food businesses, clearing the way for a bid. The maker of Lemsip has been in play since February following some terrible trading news and the departure of its chief executive Vernon Sankey. Still without a leader, Reckitt is seen as ripe for a bid by a rival eager to get its hands on its array of medicines and bleaches. Unilever, up 1p to 601p, has been mooted as a predator, together with various US and European players. A more intriguing possibility is that Associated British Foods, 12p higher to 446.5p, could spend its pounds 1bn-plus cash pile on Reckitt. According to the latest rumour, the AB Food boss Gary Weston might team up with a foreign rival to snap up Reckitt. The move would be a huge diversification into non-food activities, especially if Reckitt sells the US food unit, but it would provide AB Food with the brands and the products to boost profits.

Laporte's plight is similar to Reckitt's. The chemical group has become an ideal takeover target after being hammered by tough markets and strong sterling. The shares jumped 32.5p to 702.5p amid talk that a foreign bidder is sniffing around. A few months ago, Laporte had to abort takeover talks with Clariant after objections from the Swiss giant's major shareholder. The Alpine group could come back, although it could be pipped to the post by a European rival or a US giant. Any offer is likely to come at around 800p, valuing Laporte at pounds 1.5bn.

The rest of the market revelled in its record-breaking form. The FTSE 100 jumped 28.6 to a new closing high of 6,620.6. The peak was reached just two months after smashing the previous record. Wall Street was the main influence. The Dow's strong opening after the long holiday weekend erased the blue-chip index's earlier wobbles and spurred it on to its record.

The FTSE 250 kept up with the leaders, finishing 35.8 higher at 6010.8, the second consecutive all-time high. The Small Cap also did well, 5.8 up at 2696.4. National Power surged 16p to 482p amid continuing talk of a strike from German utility RWE. The Germans are believed to have told City institutions of their desire for a UK buy. Gas company BOC set its own record. The stock was pumped 75p higher to a best-ever 1,361p after receiving the rumoured bid from rivals Air Liquide and Air Products. The Anglo-French combo is thought to have topped an earlier 1420p-per-share offer.

The cement-maker Blue Circle constructed a 21.75p advance to 459.25p on a positive meeting with analyst. Earnings upgrades might be on their way. Rehashed talk of a merger with Hanson, up 16p to 613.5p, was also heard.

"Good things come to those who wait" and Guinness maker Diageo finally rebounded from recent weakness with a 25p rise to 688p. Bargain hunters were attracted by vague talk of corporate action. Allied Domecq shed 17p to 607p after backing the bid by Whitbread, up 14p to 999p, for its pubs, even though it is lower than a rival offer by Punch Taverns and Bass, down 20p to 943p.

A Goldman Sachs "buy" note pushed investment trust 3i 49.75p higher to 789.75p, while mining group Rio Tinto dug a 60p rise to a record 1199.5p after Deutsche Bank said "strong buy". Vodafone Airtouch lost 11p to 1137p ahead of today's mobile subscriber numbers, while Dixons, results today, jumped 21p to 1352p amid hopes of a share buyback. Its Freeserve Internet service signed an e-mail deal with World Telecom which sent the AIM-listed minnow 1.5p higher to 75p.

JP Morgan excited the food retailers. The US heavyweight broker started coverage of the sector with a "long-term buy" on Tesco, up 0.5p to 172.5p and a neutral stance on Sainsbury, up 2.5p to 417.5p and Safeway, 2p lower to 243.25p.

In the midcap, the microchip designer ARM Holdings hit another lifetime high of 1032.5p after rising 114.5p. Persistent rumours of a large contract with Texas Utilities and upgrades by US brokers caused the jump.

Vague takeover talk pushed United Biscuits 11p better to 193p while Lara Croft game-maker Eidos beamed 140p higher to 2512.5p on rumours of upgrades and new games.

Hopes of sector consolidation and rising Brent price helped the oil explorers. Enterprise Oil jumped 25p to 487.25p amid talk that the Italian giant ENI is interested. British Borneo, up 11p to 236.5p, and LASMO, 7.5p higher to 166.5p, followed the trend.

Brokers' downgrades savaged engineer Charter, down 17p to 337p, and in-play retailer Storehouse.

The biotech tiddler KS Biomedix unveiled the expected good news on its colon cancer treatment and rose 6p to 420p. Vague bid talk pushed engineer Six Hundred Group 6.5p higher to 82p in large volume. However, building materials maker Norcros dropped 1p to 94p after the collapse of management buy-out talks. Packaging company Macfarlane lost 8p to 78.5p after a profit warning, while medical group Bespak bled 150p to 662.5p after the delay of a contract with Glaxo Wellcome.



GILTS INDEX: 106.25 -0.57

FAYREWOOD IS believed to be planning the flotation of its French subsidiary on the Paris market for growing companies. The computer services group has just completed a very successful spin-off of a stake in its German business Computerlinks on Frankfurt's Neuer Markt. Shares start trading today and Fayrewood is looking at listing its French arm Alpha Media on the Nouveau Marche. The business, acquired for pounds 3.8m, had sales of pounds 2.25m in the last six months.

THE CAR repairer and distributor Quicks is attracting some speculative buying. The shares motored 1p ahead to 92.5p in good volume yesterday amid talk of a bid. Some dealers believe that after buying Kwik-Fit, Ford, the US car giant, could have a pop at Quicks. Other options include a merger with UK rival Lookers. Any offer is likely to be pitched at around 120p-per-share, valuing Quicks at over pounds 45m. Last year, the firm had sales of pounds 642.5m and profits of pounds 5.3m.